Coffee, Chicken And Clinics Fuel Chicago's Post-Covid Resurgence

Chicago-area retail has rebounded from the depths of the pandemic.

The resurgence has been driven by strong growth in quick-service restaurants and medical retail as well as tight vacancy on key corridors throughout the city, panelists said at Bisnow’s Chicago Sports, Entertainment and Retail Summit on May 6 at Andretti Indoor Karting & Games in Schaumburg.  

“Downtown and the urban market in Covid got the snot kicked out of it,” said John Vance, principal at Stone Real Estate. “Now, it’s a much different feel in the environment.” 

Baum Realty principal Deena Zimmerman agreed with Vance’s assessment of the Chicago retail scene in the wake of the global crisis, saying the asset class was “beat up hardcore.” But now, the city’s strongest shopping corridors are seeing vacancy rates fall and a competitive leasing market, she said.

Shopping strips on Armitage Avenue, Southport Avenue and Fulton Market have almost no vacancies, Zimmerman said.  

“If you are a tenant rep looking on Armitage, Southport or the Gold Coast, nothing's impossible, but that is very, very difficult,” Vance said. 

Zimmerman said the tenant types driving leasing volume are often quick-service restaurants that center on coffee and chicken. She said if you’re a broker representing those types of clients, it can be difficult because some other tenants can ink exclusive deals with landlords that limit optionality for others. 

In March, total retail and food services sales rose 1.7% month-over-month, the largest gain since January 2023, according to a Newmark Q1 report. 

Abbell Associates Senior Vice President of Leasing Tom Walsh also said he sees fast-casual concepts driving leasing today. 

“How many hot chicken concepts can we have and how many new drive-thru coffee shops are there?” Walsh said. “Those two categories alone might top the list, but the fast-casual category has continued to expand, especially as certain food types start modifying to that concept.”

Additionally, Walsh said, medical retail has backfilled a decent chunk of empty space in the properties he has represented, and pet-based concepts have done well, too. The company has recently worked on subleasing a handful of former CVS stores at highly discounted rates compared to the rest of the market.

He said the below-market opportunities gave him the chance to interact with many local prospective tenants, who have a limited physical presence but want to get into the business and leverage the discounted price. 

“There is a real hunger out there,” Walsh said. “A high percentage, actually, may be first- or second-generation migrants that want to own their own business, and diverse types of business, too.”

Zimmerman said she works with many franchisees and tries to set them up for success by educating them about the marketplace. She said she educates them on the trade-offs between tenant improvement funds and higher rent or different rental structures. 

Franchisees are often setting up their businesses with their life savings or money from the Small Business Administration, she said, so she wants to set them up with the expectation that the market will be competitive. That relationship can take a lot of work.  

“I don’t have kids, I have 300 franchisees,” Zimmerman said.